Trump’s Trade War With China Could Cost Republicans The House

Republican insiders on Capitol Hill are trying to walk President Donald Trump away from a looming trade war with China, even as Trump’s economic nationalist advisers argue that this week’s high-stakes moves on tariffs are just a negotiation.

Political staffers who are tasked with keeping an eye on the GOP’s fortunes in this fall’s elections have urged caution as Wall Street was set to close out another rocky week driven by uncertainty.

But Trump and his economic advisers in the West Wing are treating the threat of U.S. tariffs on Chinese goods such as televisions, medical devices and batteries — and China’s threatened retaliations on American soybeans, corn and tobacco exports — as a negotiating ploy.

Newly minted White House economic adviser Larry Kudlow, a former CNBC analyst, told reporters on Friday that there are “back-channel discussions” taking place, providing no details. Meantime, Treasury Secretary Steve Mnuchin, speaking to Kudlow’s former employer, admitted “there is a level of risk that we could get into a trade war.”

Republican political sherpas sees the ongoing tit-for-tat on tariffs as a risky mix of bluffing, bravado and improvisation.

Setting aside the economic insanity of starting a large-scale trade war with America’s largest trading partner, the Trump gambit carries very real risks for his domestic plans. China’s proposed countermeasures take aim at the heart of Trump country — the areas where soybean, corn and tobacco farmers grow were also fertile territory for Trump votes. The president will need their support if he is to win a second term in 2020.

More immediately, Republicans in those places will need the support of those farmers and their neighbors if they’re to win re-election this fall, defend their majorities in the House and the Senate and give Trump a free hand to pursue other parts of his agenda. Should Democrats retake one or both chambers of Congress in November’s elections, White House advisers fear the bulk of 2019 and 2020 will be spent dealing with panels and investigations.